CLSA exits Japanese automotive tools retailer

The private equity firm acquired a 55% stake in Worldtool in 2015 at an enterprise valuation of JPY10 billion ($82.8 million), investing through its $210 million Sunrise Capital II fund. Daiwa House Group, the parent company of Royal Homecenter, did not say how much it had paid for Worldtool, merely stating that sales came to JPY9.6 billion ($89.6 million) for the 12 months ended July 2019.

The company was founded by Tsutomu Nakajima in 1995 as a supplier to Japan’s burgeoning community of amateur car enthusiasts. Previously, high-quality automotive tools for Japanese cars were only made by the manufacturers themselves and distributed to dealers and service centers by wholesalers. Recognizing that small garage operators and hobbyists were largely excluded from this official supply chain, Nakajima went after this retail market.

The initial product line comprised auto maintenance tools as well as LED lights, solar panels and electric generators, all manufactured in China and Taiwan. By the time CLSA invested – the private equity firm met Worldtool through BCN, a used car auction site operator it acquired two years earlier – the company had approximately 120 directly-owned stores. However, it had grown so quickly that the operating model was largely unchanged from when the network was only 20-30 outlets.

Worldtool now has 189 stores, of which 172 are directly owned, eight are franchised out, and nine focus on the wholesale market. In addition to enhancing the management structure, CLSA supported Nakajima’s longstanding ambition to expand overseas. They opted to target Thailand first – over 80% of vehicles were made in Japan, so limited product modification was required – and there are now six outlets in the country.

Royal Homecenter has 59 stores nationwide and generated sales of JPY89.7 billion in the 2019 financial year. It is seen as complementary to Daiwa House’s core construction operation.

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• Topics
• North Asia
• Trade sale
• Consumer
• Japan
• CLSA Capital Partners
• automobiles